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Topic 7 - Members Remedies (Wk 9) - Coggle Diagram
Topic 7
- Members Remedies (Wk 9)
Purpose of members remedies
It is debatable whether the rights of majority and minority shareholders are balanced
If the directors make decisions that are unfair to the member, the member may be able to seek a remedy
Statutory remedies for oppression
Oppression remedies
ss232-235
Is provided when a court makes an order because the conduct of the affairs of the company is:
contrary to the interest of the members as a whole or
oppressive or unfairly prejudicial to a member of some members
A member, former member or anyone else ASIC considers appropriate can apply for the oppression remedy
s234
Most commonly used in proprietary companies
Tests:
reasonable person test (Wayde v NSW Rugby League)
reasonable expectations test (Boyd v Feeney)
If a court finds oppression has occurred, it can order remedies
s233
with ASIC within 14 days
s235
Winding up of the company remedy
s461
Court will usually only order the winding up as a last resort
Grounds:
directors acted in their own interest or unfairly or unjustly to the members as a whole
s461(1)(e)
the affairs of the company are being conducted in a way oppressive, unfairly prejudicial or unfairly discriminatory
s461(1)(f)
acts or proposed acts or omissions oppressive, unfairly prejudicial or unfairly discriminatory against members
s461(1)(g)
winding up on 'just and equitable grounds
s461(1)(k)
Statutory injunction remedy
s1324
Statutory derivative action
Pt 2F.1A
: Enables various parties to apply to the court for leave to take legal action on behalf of and in the name of the company when the company will not itself take actions
Can be sought by:
s236(1)(a)
member, former member, person entitled to be registered as a member
an officer or former officer of the company
Court will grant leave under
s237(2)
when all conditions are met:
company in unlikely to bring the proceedings
applicant is acting in good faith
in the best interests of the company
there is a serious question to be tried
notice requirements have been met or its appropriate to grant regardless
Personal action
General law
Seek an order to wind up the company, based on:
oppression or unfairly prejudicial conduct
directors acting in their own self-interest
it is just and equitable to do to
May involve a representative or class action
Sue for breach on contract
An action based on the equitable limitation on the majority members voting power
Statutory contracts
A member can take personal action to seek enforcements of personal rights conferred on them by the company's constitution